Take advantage of high oil prices
by Joseph SantangeloCape Cod and other resort areas of New England can find opportunities in record high oil prices, along with a weak dollar and slowing economy.
Consumers, shaken by high energy prices, are looking for ways to save at the store, in restaurants and on their vacation spending.
Declining sales among higher-end retailers, fewer golf outings, slow auto purchases and declines at home improvement, electronics and furniture stores are some immediate impacts. But there are opportunities in the current oil price spike, as well.
“You can take adversity and turn it to your advantage,” said John Bitner, chief economist of Eastern Bank based in Boston, speaking at a recent SBA awards luncheon, co-hosted by Cape Business Publishing Group.
“The most immediate drag on the consumer is the high price of food and energy. That comes out of every monthly budget, and it is starting to hurt and starting to really be noticeable.”
Why is that an advantage to the Cape?
Fewer Americans will be going to Europe this summer. Conversely, a weak U.S. dollar makes Cape Cod look like a bargain to foreigners.
“You have a beautiful place here on the Cape and it’s very unique,” said Bitner. “It’s well known in Europe and in Canada and other places. This is a bargain for those people. So that’s one advantage that you have.”
“Another is people will be staying closer to home and vacationing closer to home. So the high cost of gas could be working to your advantage. You’ve got a lot of people in the Boston/Eastern Massachusetts region who will be coming to the Cape. Now, when they come here, they will have less to spend; that’s the downside. Their budgets are going to be much tighter.”
That means adjusting business strategies in various ways, such as:
• More early bird specials at restaurants
• Promotional incentives like gas cards
• Lower-cost items in retail stores
• Value packages at hotels and motels, combining with other services.
The Cape Cod Chamber of Commerce is helping local businesses promote hot deals and value packages, along with last-minute specials on available hotel and motel rooms.
“Many members have been creating packages for their guests that offer value added,” said Wendy K. Northcross, CEO of the Cape Cod Chamber of Commerce.
They range from traditional percentage rate discounts to creative packages that include everything from a free meal at a popular restaurant or a pair of complimentary whale-watch cruise tickets to a massage.
Hot deals, special packages and last-minute specials are all updated regularly at capecodtravelguide.com, which also offers listings for vacation packages including spas, golf and family amenities.
How high will oil prices rise, and when will they stop? No one knows for sure.
An estimated $105 to $110 per barrel of oil is based on global supply and demand. Other factors include large investors who buy commodities as part of their portfolios. The shrinking value of the dollar also adds to the cost of oil, as well as worldwide political risk that could disrupt oil production.
According to Lynn Browne, executive vice president and economic adviser at the Federal Reserve Bank of Boston, “The higher oil prices are in essence a tax on consumers and a tax we’re largely sending overseas. So that has been undermining consumer spending directly and also consumer sentiment.”
Declining home prices also contribute to consumer caution on spending. Said Bitner, “A decline in housing values means [consumers’] net worth is going down. They don’t feel as prosperous as they did because their net worth is shrinking. That tends to make them more careful about spending money.”
Published in Cape Business July/August 2008
Joseph Santangelo Joseph Santangelo has been a statehouse bureau chief, a corporate executive and currently works for the Connecticut Legislature. 
